The Nets announced the much-anticipated move on Monday, a day before they would have been responsible for his $3.3 million contract.
By waiving Dooling, New Jersey has to pay him only the $500,000 guaranteed portion of his contract.
The roster move does not affect how much money the Nets will have to spend for free agents since their $27 million bankroll was based on calculations that Dooling would be waived.
The free agency sweepstakes begin Thursday and the Nets will be looking to woo the likes of LeBron James, Dwyane Wade and Chris Bosh to New Jersey to play for new owner Mikhail Prokhorov and new coach Avery Johnson.
In two seasons with New Jersey, Dooling averaged 8.6 points and 3.1 assists in 130 games. The former first-round pick of the Orlando Magic in 2000 has career averages of 7.2 points and 2.2 assists.